Dax Index News: Fed Rate Cut Bets Boost Futures Despite DAX Slump—Forecast Today

DAX Tumbles as US Jobs Report Fuels Stagflation Risk

The US Jobs Report spooked investors as hot inflation data and rising unemployment triggered stagflation fears. The DAX tumbled 2.66% on Friday, August 1, following Thursday’s 0.81% drop, closing at 23,426.

Weaker-than-expected PMI data from China and fresh US tariffs sent the DAX into the red at the opening bell. The S&P Global China General Manufacturing PMI fell from 50.4 in June to 49.5 in July, dropping below the neutral 50 level. US President Trump announced tariffs on July 31 as the 90-day tariff pause expired, adding to the negative sentiment.

Eurozone inflation data supported expectations of the ECB delaying further rate cuts. The annual inflation rate held steady at 2% in July, with core inflation at 2.3%. A more hawkish ECB rate path could raise borrowing costs, impacting corporate earnings and share prices.

Sector Snapshot: Autos, Banks, and Tech Stocks Tumble

Auto stocks led the losses on August 1. Fears of a potential slump in demand over rising US stagflation risks and a slowing Chinese economy weighed on sentiment. Daimler Truck Holding plunged 8.71%, with Volkswagen sliding 3.21%. BMW, Mercedes-Benz Group, and Porsche also posted sizeable losses.

Deutsche Bank and Commerzbank ended the session down 3.07% and 0.75%, respectively.

Meanwhile, Infineon Technologies and SAP dropped 2.41% and 2.45%, respectively.

Wall Street Crashes as US Jobs Report Sends Red Flags

US markets extended their losses on August 1 as investors reacted to a weak US Jobs Report and corporate earnings. The Dow fell 1.23%, while the Nasdaq Composite Index and the S&P 500 slid 2.24% and 1.6%, respectively.

The US unemployment rate rose from 4.1% in June to 4.2% in July, despite a lower participation rate. Nonfarm payrolls increased 73k in July after a modest 14k rise in June. Significantly, the June number was revised down from 147k, indicating a deteriorating labor market.

June’s hotter-than-expected inflation indicators and July’s labor market data triggered stagflation fears, driving demand for safe-haven assets. Gold rallied 2.1% to close at $3,359.

The US Jobs Report fueled bets on a September Fed rate cut as recession fears mounted. According to the CME FedWatch Tool, the probability of a September Fed rate cut jumped from 35.5% on July 25 to 80.3% on August 1.

Amazon.com (AMZN) plunged 8.27% despite higher revenue and a jump in international profit. Amazon Web Services saw slower growth compared to peers, disappointing investors.

US Factory Orders and the Fed in Focus

On Monday, August 4, US factory orders and Fed commentary could influence market sentiment. Economists forecast factory orders to slide 5.2% month-on-month in June after soaring 8.2% in May. A larger decline could fuel recession fears, weighing on risk assets such as the DAX. Conversely, a higher reading may lift sentiment.

While the numbers will draw interest, Fed commentary will likely have a greater influence on market trends. Reactions to the US Jobs Report will be crucial after Friday’s market rout.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook hinges on Services PMI data and central bank chatter.

• Bullish Case: Stronger services PMI data and dovish central bank rhetoric. These factors could send the DAX toward the 50-day Exponential Moving Average (EMA) and potentially the 24,000 level.
• Bearish Case: Weak services PMI numbers or hawkish central bank cues may drag the DAX toward the crucial 23,000 support level.

At the time of writing on August 4, the DAX futures have jumped 100 points, while the Nasdaq 100 gained 95 points. Rising bets on a 50-basis point September Fed rate cut sent the futures markets higher.

DAX Technicals

After Friday’s sell-off, the DAX sits below its 50-day EMA while trading above the 200-day EMA. The EMAs signal a bearish near-term but bullish longer-term bias.

• Upside Target: A breakout above the 50-day EMA could bring the 24,000 resistance level into play. A sustained move through 24,000 may enable the bulls to target the July 10 record high of 24,639.
• Downside risk: A drop below 23,350 could expose sub-23,000 support levels.

The 14-day Relative Strength Index (RSI), at 38.41, suggests the DAX could drop to 23,000 before entering oversold territory (RSI< 30).

DAX Outlook Summary: Trade Headlines, Services PMI, and Central Bank Guidance

Traders should closely monitor key economic data, corporate earnings, trade developments, and central bank guidance, with US services PMI data likely to dominate.

Explore our exclusive forecasts to assess whether improving trade sentiment could lift the DAX to new highs. Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.